Monday, October 6, 2008

The markets ended September with a big decline in the major indexes. Last week the volatility of the past month continued as stocks traded like a yo-yo – falling 777 points after congress failed to approve the 700 billion dollar bailout, and then rising 500 points before hitting new 52 week lows by the end of the week after the bailout was approved.

There was some negative dividend news from S&P that there were 138 dividend cuts or suspensions in the third quarter while 346 issues increased their payments to shareholders. Most of the dividend cuts were in the financial sector. Standard and poors reported the following:

“It was the worst September for dividends since we started keeping dividend records in 1956,” says Howard Silverblatt, Senior Index Analyst at Standard & Poor’s. “During the second quarter, companies were nervous and cautious. The third quarter, however, saw many companies deciding to take action, and that action took $22.5 billion out of the pockets of investors.”

There were some bright spots however as the number of dividend increases were almost three times the number of dividend cuts or omissions.

Last week there were several companies which declared increases in their dividend payments to shareholders.

CLARCOR Inc. (CLC) Board of Directors declared an increase in the regular quarterly dividend from $0.08 per share to $0.09 per share. This increase raises the annual rate from $0.32 per share to $0.36 per share, a 12.5% increase and the 25th consecutive annual increase. The stock currently yields about 1%.

DENTSPLY International Inc. (XRAY) declared a quarterly cash dividend of $0.05 per share of common stock, an indicated annual rate of $0.20 per share. This represents approximately an eleven percent (11%) increase in the existing dividend. This dividend achiever currently yields about 0.50%.

Northwest Natural Gas Company (NWN) has increased the quarterly dividend on the company's common stock by 5.3% to 39.5 cents per share. This marked the 53rd consecutive year of dividend increases. NWN is a dividend champion that yields about 3% right now and trades at less than 20 times earnings. I plan on researching this stock further.

Speedway Motorsports (TRK) has increased the annual dividend on the company's common stock by a little over 1% to 34 cents per share. This is the seventh consecutive year that Speedway Motorsports has increased cash dividends to its stockholders. The stock currently yields 1.80%.

MFA Mortgage Investments, Inc. (MFA) announced a 10% increase in its quarterly dividend to $0.22 per share for the third quarter of 2008. Despite the fact that this stock has paid dividends for over ten years, the quarterly payments are pretty volatile from month to month. MFA's primary focus is high quality, higher coupon hybrid and adjustable-rate MBS assets. At June 30, 2008, approximately 99% of MFA's assets consisted of MBS issued or guaranteed by an agency of the U.S. government or a federally chartered corporation, other MBS rated "AAA" by Standard & Poor's Corporation, MBS-related receivables and cash. The stock currently yields over 15%.

I have found that screening the dividend news could provide you with some gems for further research. One such gem could be NWN. Furthermore with so many negative news concerning the stock market and dividend cuts in the financial sector it pays to know that there actually are companies which are confident enough in their ability to generate stable revenues and earnings which would support dividend increases.

5 comments:

Do you think there is a time that one should leave the market.. the members of Myinvestorsplace.com ... have asked that question... but we are confused...the vix is at the highest level ever.. which is a contrarian indicator... and yet others think we should leave the market... what do you suggest...

If I had more cash on hand I would have bought more stock. I think that it is a bad time to be selling right now since I am a long term investor. I doubt that I will be needing the cash for several decades to come.

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